SingTel – BT

SingTel's BPL bid cast in a different light

SINGTEL'S BPL (Barclays Premier League) victory is widely seen as the goal it needed to start challenging incumbent StarHub. While that is undoubtedly true for the short term, the ultimate aim behind its willingness to pay top dollar could lie in forcing the policy change that will tilt the balance of pay-TV power in the long run.

And things couldn't have worked out better for SingTel when the government last Friday finally reversed its long-standing position of non-intervention when it comes to pay-TV content.

While the authorities did not prohibit the signing of exclusive contracts, what they did do was to kill off the impetus for signing such agreements in the first place.

A draconian ban would seem far too interventionist under free- market rules, so authorities opted for a softer 'cross-carriage' approach. However, the intention is the same: avoid the bruising bidding war that led to the dramatic escalation of pay-TV prices in recent years.

This could be the exact outcome SingTel was gunning for when it shelled out a reported US$400 million to land the BPL, the crown jewel of StarHub's sports programming for the last decade. The exact price tag for the 2010-2013 BPL broadcast rights remains a closely guarded trade secret but the red camp's bid must have been a lot higher than StarHub's for Premier League officials to make a snap decision without the usual practice of lengthy deliberations.

At that time, market analysts questioned the business sense in SingTel's bidding strategy, while consumers were up in arms over the need to pay for a separate mio TV subscription on top of a StarHub one to watch BPL matches.

However, if SingTel were any less aggressive with its bid, the pay-TV regulatory landscape would likely have maintained status quo in the near term.

In 2006, SingTel tried unsuccessfully to secure BPL rights when preparing its foray into the pay-TV market.

The operator subsequently appealed to the Media Development Authority of Singapore (MDA) to ban exclusive content on the grounds that it was anti-competitive, but the authorities chose not to interfere in such commercial decisions.

The status quo is detrimental to SingTel's pay-TV ambitions in many ways. For years, StarHub has managed to lock in a stable of prized content such as its popular TVB drama serials, AXN and Star World through exclusive agreements, leaving SingTel with little room to manoeuvre in terms of content acquisition. And content providers will also continue to lean towards the incumbent as it has a larger pool of subscribers and therefore can afford to pay more for their programmes.

However, the unwavering stance of non-interference returned to confront MDA when SingTel scored the BPL with an extremely aggressive bid the second time around. Beyond the stated goal of scoring more pay-TV customers, the victory may have also driven home to all the point that being held ransom to exclusive content is detrimental to both industry players and consumers alike.

And while MDA initially refused to budge despite consumer uproar, the impasse over the 2010 FIFA World Cup broadcast rights may have been the straw that busted the camel's back.

This change in policy vindicates SingTel's failed appeal in 2006. In addition, the company also stands to gain the most from the new cross-carriage mandate by a sheer stroke of timing.

The new rule is not being applied retrospectively, meaning SingTel gets to keep its 2010-2013 BPL rights to itself.

Content agreements are getting shorter as the pay-TV industry is undergoing rapid change, so no one wants to be locked into a long-term contract.

The three-year tenure makes SingTel's BPL agreement one of the longest in local pay-TV circles today. With the new rule in place, SingTel can now bid for any content in StarHub's cable TV arsenal once their current exclusivity period runs out, and this timeframe is likely to be under three years.

With StarHub still the market leader (notwithstanding the loss of most of the sports channels), there is definitely more content to poach from the green camp than the other way around. In other words, SingTel can unlock StarHub's content faster than the green camp can reclaim its BPL crown.

All other things being equal, the BPL could be the crucial swing vote in many households. This is because with the new ruling, SingTel's mio TV set-top box can now be used to access both the BPL as well as programmes that were once restricted to StarHub's cable TV platform.

Although the new rule does allow M1 to throw its hat into the pay-TV ring, it will still take some time for Singapore's smallest operator to get acquainted with a new line of business. SingTel, on the other hand, has had more than three years to get its mio TV machinery up and running.

The devil is usually in the details and in trying to foster fairer competition, regulators should consider the implications for current players, especially StarHub, when enforcing the new policy.

As for SingTel, it may just have shown there was indeed much method behind the madness of its all-out BPL offensive.

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